Airtel Kenya and Telkom Kenya Sign Binding Agreement to Merge
In the classic style of two heads are better than one, Airtel Kenya and Telkom Kenya have signed a binding agreement to merge their mobile, enterprise, and carrier services into a single joint venture company to be named ‘Airtel-Telkom’. This move will also see the two firms seek regulatory approvals from the Competition Authority of Kenya (CAK).
Under the deal, Airtel Kenya and Telkom Kenya said in a statement however that, Telkom Kenya’s real estate portfolio and specific government services will not form part of the combined entity. Both firms said; “The final shareholding will be determined at the closing of the transaction. Telkom Kenya has the option of holding up to 49 per cent of that shareholding,”
They also added that the joint venture company will be chaired by Telkom Kenya’s chief executive Mugo Kibati while Airtel Kenya’s chief executive Prasanta Sarma, will be appointed chief executive officer.
In latest data from Communications Authority of Kenya (CAK) covering the three months to September 2018, Airtel Kenyan the Kenyan subsidiary of Indian telecom giant Bharti Airtel, had a market share of 22.3 per cent while Telkom had nine per cent.
60 percent of Telkom Kenya is majority owned by the UK-based private equity firm Helios Investment Partners and the Kenyan government owns 40 per cent.
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An Impressive 33 Percent Market Share
Pulling off a successful deal of this magnitude, could potentially provide both company, with a combined share of 33.3 percent against the Telco market leader Safaricom’s 64.2 percent.
The deal will also see Airtel Kenya and Telkom Kenya (Kenya’s second and third-largest telecom operators), command 14.6 million mobile subscribers, which is 48.76 per cent of Safaricom’s 29.94 million as at the end of September 2018.
Both Telcos said in a statement that Airtel Networks Kenya Limited (Airtel Kenya) and Telkom Kenya Limited (Telkom Kenya) will see no immediate changes to their operations which will continue as usual.
The Telcos also stated that similarly, there will also be no change to the current respective leadership and management, as well as legal, organisational and staffing structures,”
In addition, both brands; ‘Airtel’ and ‘Telkom’, as well as their respective products and solutions, will continue to co-exist.
Safaricom had for 8.93 billion minutes in the local voice market, while Airtel and Telkom had 4.78 billion minutes and 619.4 million minutes respectively, in the same market.
The companies state that as per the agreement, both the partners will combine their operations in Kenya and establish an entity with enhanced scale and efficiency, a larger distribution network and strategic brand presence, which will enhance the range and quality of products and service offerings in the market, in addition to greater choices and convenience to the consumer.
Treasury Secretary Henry Rotich added that “This move is well aligned with the government’s agenda to optimise the value of the assets that it holds in trust, on behalf of Kenyans, while cementing the country’s position not only as a regional business hub but also as an international investment magnet,”.
With this merger in the works, things are about to get even more interesting in the Telecommunication market.
